Craft Distillery Law
Are you considering opening a craft distillery in Nevada? This area of law can be complicated because there are several areas of Nevada law that govern craft distillery. This article addresses the application process, what your license allows you to do, procedures for complaints about licensees, and how licensees can appeal decisions negatively affecting your license. It is intended for general information and is not legal advice for your particular matter. This article is valid as of January 24, 2017.
NRS 369.180(h) states that a license is required to secures a craft distiller’s license from this State. A craft distiller’s license allows you to operate an establishment which manufactures distilled spirits from agricultural raw materials through distillation and is authorized to sell those distilled spirits. “Distillation” is defined as the process of producing or purifying spirituous liquor by successive evaporation and condensation. NRS 597.200.
WHERE DO I APPLY FOR THE LICENSE?
NRS 369.190 directs that a craft distiller’s license must be made to:
- The board of county commissioners of the county in which the applicant maintains his or her principal place of business or if the applicant does not maintain his or her principal place of business within the boundaries of an incorporated city; or
- The governing body of the city in which the applicant maintains his or her principal place of business if the applicant maintains his or her principal place of business within the boundaries of an incorporated city.
WHAT DOES THE APPLICATION CONTAIN?
It will generally contain:
- The Applicant’s name and address.
- If the Applicant is a partnership, the application must include the names and addresses of all partners.
- If the Applicant is a corporation, association or other organization, the application must include the names and addresses of the president, vice president, secretary and managing officer or officers.
- If a person is carrying on or transacting business in this state under an assumed or fictitious name, the person making the application must attach to the application:
- A certified copy of the certificate required by NRS 602.010 or any renewal certificate required by NRS 602.035.
- A certificate signed by an officer of the corporation or by each person interested in, or conducting or carrying on such business, or intending so to do, and acknowledged before a person authorized to take acknowledgments of conveyances of real property, indicating the name of the authorized representative whose signature may be required on the license under the provisions of this chapter.
- The Application must specify the location, by street and number, of the premises for which the license is sought.
- Be accompanied by the annual license fee required for the particular license for which application is made.
WHAT DOES THE BOARD/GOVERNING BODY LOOK FOR IN DECIDING WHETHER TO ISSUE MY LICENSE AND WHAT IS THE PROCESS?
It must find satisfactory evidence that the applicant is a person of good moral character.
If the board/governing body denies the application, the governing body shall return the license fee accompanying the application to the applicant. If the governing body approves an application, they shall forward it to the Department of Taxation, together with the board’s or the governing body’s written approval thereof and the license fee accompanying the application.
Upon receipt thereof the Department of Taxation shall review the application and approval, and, if no further objections are presented or known, shall issue the appropriate license to the applicant.
CAN I APPEAL THE DENIAL OF A LICENSE?
Absolutely. The Department of Taxation may grant an applicant whose application has been denied by holding a new hearing. You must convince the Department that the denial was arbitrary, unreasonable or unjust.
WHAT DOES THE LICENSE CONTAIN?
- The name of the person to whom it is issued.
- The location, by street and number, of the premises for which the license is issued.
- The particular class of liquor or liquors that the licensee is authorized to sell.
CAN I TRANSFER MY LICENSE?
The holder of the license is not transferrable, but you can move the location of the premises if you notify the Department first.
WHAT EXACTLY DOES A CRAFT DISTILLERY LICENSE ALLOW ME TO DO?
- Manufacturing spirits from raw agricultural raw materials through distillation and blend, age, store and bottle the spirits so manufactured. An operator may NOT manufacture spirits derived from neutral or distilled spirits manufactured by another manufacturer.
- In any calendar year, sell and transport in Nevada not more than a combined total of 10,000 cases of spirits at all the craft distilleries the person operates to a person who holds a license to engage in business as a wholesale dealer of liquor pursuant to chapter 369 of NRS.
- In any calendar year, manufacture for exportation to another state, not more than a combined total of 40,000 cases of spirits at all the craft distilleries the person operates. A case means 12 bottles, each containing 750 milliliters of distilled spirits.
- On the premises of the craft distillery, serve samples of the spirits manufactured at the craft distillery. Any such samples must not exceed, per person, per day, 4 fluid ounces in volume.
- On the premises of the craft distillery, sell the spirits manufactured at the craft distillery at retail for consumption on or off the premises. Any such spirits sold at retail for off-premises consumption must not exceed, per person, per month, 1 case of spirits and not exceed, per person, per year, 6 cases of spirits. Spirits purchased on the premises of a craft distillery must not be resold by the purchaser or any retail liquor store.
- Donate for charitable or nonprofit purposes and transport neutral or distilled spirits manufactured at the craft distillery in accordance with the terms and conditions of a special permit for the transportation of the neutral or distilled spirits obtained from the Department of Taxation pursuant to subsection 4 of NRS 369.450.
- Transfer in bulk neutral or distilled spirits manufactured at the craft distillery to a supplier.
WHAT ARE THE PENALTIES FOR VIOLATION OF THE CRAFT DISTILLERY LAW?
Your license will be revoked or suspended.
Additionally, in addition to any other available remedies, a person who has suffered injury, including, economic damage, as the proximate result of a violation of the provisions of the applicable laws may bring a civil action against the person who committed the violation to recover:
- For the first violation, $100 plus the injured person’s actual damages, attorney’s fees and costs, if any.
- For the second violation, $250 plus the injured person’s actual damages, attorney’s fees and costs, if any.
- For the third and any subsequent violation, $500 plus the injured person’s actual damages, attorney’s fees and costs, if any, and any punitive damages that the facts may warrant.
WHAT WILL CAUSE THE REVOCATION OR SUSPENSION OF A CRAFT DISTILLERY LICENSE?
Under NRS 369.230, the board/governing body of a city, as applicable, may, on its own, and must upon receipt of a verified complaint in writing of any person, investigate the action of any licensee under the applicable laws. The governing body has the power to recommend the temporary suspension or permanent revocation of a license for any one of the following acts or omissions:
- Misrepresentation of a material fact by the applicant in obtaining a license under this chapter;
- If the licensee violates or causes or permits to be violated any of the provisions of this chapter;
- If the licensee commits any act which would be sufficient ground for the denial of an application for a license under this chapter;
- If the licensee sells liquor to a wholesaler or retailer who is not a holder of a proper license or permit at such time; or
- If the licensee fails to pay the excise tax or any penalty in connection therewith, in whole or in part, imposed by law, or violates any regulation of the Department respecting the same.
WHAT IS THE PROCEDURE FOR A COMPLAINT THAT HAS BEEN FILED AGAINST A LICENSEE?
It appears the complainant has 1 year from the date of the occurrence to file a complaint with the board/governing body. The board/governing body then has 10 days after receipt of the complaint to issue a citation directing the licensee to file a verified answer showing why his license should not be revoked or suspended.
Failure to answer within the time specified shall be deemed an admission by the licensee of the commission of the act or acts charged in the complaint. Thereupon, board/governing body shall give written notice of the failure of the licensee to answer to the Department of Taxation. The Department forthwith shall suspend or revoke the license, as the case may be, and shall give notice of such suspension or revocation by registered or certified U.S. Mail.
If there is an answer, the governing body shall fix a time and place for a hearing and give the licensee and the complainant not less than 5 days’ notice thereof via U.S. Mail.
WHAT OCCURS AT THE HEARING?
Under NRS 369.260, the board/governing body shall hear all relevant and competent evidence offered by the complainant and by the licensee. After the hearing and the matter is submitted, the Board/governing body has 10 days to render its written decision recommending the suspension or revocation of the license, or dismissing the complaint, with a statement of its reasons therefor.
This recommendation will be forwarded to the Department of Taxation which shall cause the license to be suspended or revoked and shall give notice thereof.
WHAT IF I FAILED TO APPEAR AT THE HEARING?
If the licensee can show his failure to appear was excusable before the license is suspended or revoked, the Department of Taxation may, in its discretion, grant a new hearing if it finds that the
decision of the board/governing body of a city was arbitrary, unreasonable or unjust. The Department can then either revoking or refusing to revoke the license affected.
IS THERE A PROCEDURE FOR SUMMARY SUSPENSION OR REVOCATION OF A LICENSE?
Yes, in the case of “an aggravated and flagrant violation of law,” the Department of Taxation shall hold a hearing before the board of county commissioners or the governing body of a city and offer and any additional evidence offered by the board of county commissioners, the governing body or the licensee. NRS 369.280.
The law states that this matter must be hearing without It appears that this matter must be
without delay by either confirming, modifying or setting aside the action of the board of county commissioners or the governing body, as applicable.
Alternatively, the Department of Taxation can independently find that a licensee is violating any of the provisions of this chapter, and issue a summary suspension of the violator’s license. The Department shall notify the board of county commissioners or the governing body of a city, as applicable, of such suspension. Within 10 days after such notice, the Department shall conduct a public hearing in the matter in the appropriate county or city, as applicable. The board of county commissioners or the governing body of a city may appear before the Department at the hearing.
CAN A CANCELLED LICENSE BE RENEWED?
Yes, under NRS 369.290, if the Board/governing body provides a written recommendation to the to the Department of Taxation, that in their opinion, the licensee has shown proper cause, the Department may renew any license cancelled as provided in this chapter.
WHAT ARE THE LICENSE FEES?
Importer’s wine, beer and liquor license: $500
Importer’s beer license: $150
Wholesale wine, beer and liquor license: $250
Wholesale beer dealer’s license: $75
Wine-maker’s license: $75
License for an instructional wine-making facility: $75
Brew pub’s license: $75
Brewer’s license: $75
Craft distiller’s license: $75
WHEN ARE THE LICENSING FEES DUE?
All license fees are due and payable on July 1 of each year or it be cancelled by the Department. Between July 15 and July 31 of each year, the fee may be paid with a penalty of 5 percent added to such fee. If the fee and penalty are not paid by July 31 of each year, the license shall be cancelled automatically.
If any license is issued at any time during the year other than by July 15, the fee shall be for that proportionate part of the year that the license will be in effect, which in any event shall be for not less than one quarter of a year.
No license shall be dated other than on the 1st day of the month in which it is granted.
ARE THERE ANY OTHER LICENSES REQUIRED?
Most likely. Under NRS 369.320, cities, counties, and towns can require an importer or seller of liquor to obtain a local license before engaging in business.